Amidst the fluctuations in the US stock market, the ancient proverb "Sell in May" rings the investment alarm

According to the Zhitong Finance APP, an old market adage is looming over the rebound momentum of the U.S. stock market: "Sell in May and go away." This saying is one of the most well-known market trends, and decades of historical performance support this effect.

Analysis from Bespoke Investment Group shows that a fund established in 1993 that tracks the S&P 500 index had a cumulative return of 171% from May to October, while the return from November to the following April was as high as 731%. This pattern remains valid from November 2023 to October 2024.

Despite President Donald Trump's unpredictable tariff policies shaking investors' confidence in many once-reliable indicators, seasonal factors remain one of the many references investors use to gauge the stock market's trajectory in the coming weeks. From the perspective of this old saying, it is currently inadvisable to chase gains—the S&P 500 index has rebounded 12% from this month's low, but it is still down 5.5% year-to-date.

Tyler Rich, co-editor of Seven Report Research, stated, "This year, the scales are clearly tilted toward 'May sellers'." He also added that the S&P 500 index faces the risk of another significant decline next month.

From a longer-term perspective, the concept of "Sell in May" is even more pronounced. Analysis from the Stock Trader's Almanac shows that over the past 74 years, the cumulative return of investing in the S&P 500 index from May to October has only been 35%, while the return from November to April has been as high as 11,657%.

This week, the stock market rebound will face heavy tests from earnings reports and market data, with the U.S. non-farm payroll report set to be the focus of the week on Friday.

Some indicators have released buy signals, including a sharp drop in investor confidence earlier this month and the S&P 500 index closing above 5,500 points. This means the index has recovered 50% of the decline from peak to trough, and some chart analysts believe this indicates that investors have begun to buy on dips again.

Difficult Start Years or "More Accurate"?

At the same time, it is important to note that seasonal factors are sending more cautious signals. Although this pattern is not absolute, the S&P 500 index often performs worse from May to October in years when the stock market starts poorly. Data from Bespoke shows that in years when the cumulative return before April is negative, funds tracking the S&P 500 index average a decline of 0.4% from May to October. As of Tuesday, the SPDR S&P 500 ETF has accumulated a decline of 5.4% year-to-date.

Rich also pointed out that this seasonal pattern is particularly applicable in years with high market volatility before May. Although the Chicago Board Options Exchange Volatility Index (VIX) has retreated from the multi-year high set earlier this month, it still hovers around 25, above the long-term average level of about 20 One potential source of volatility in mid-year is that the tariff suspension measures imposed by Trump on nearly all U.S. trading partners except China will expire in July. If tariffs are reinstated, this could further validate the effectiveness of the "May liquidation" trend, while also proving once again that the ever-changing dynamics of the global trade war may be the key factor driving market movements.

Jay Woods, Chief Global Strategist at Freedom Capital Markets, stated: "We are now in an era dominated by tariffs, and the market is more constrained by Trump's tariff policies than by any seasonal trends."

Meanwhile, most market observers believe that for ordinary investors, holding long-term is often wiser than trying to precisely time the market. Analysis from Bespoke found that since 1993, simply buying and holding the SPDR S&P 500 ETF has yielded a return of up to 2100%